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Neelu, nidhulu, niyamakalu
Most Indian states are reeling under severe power cuts as the Telangana
strikes take its toll on the production of Singareni Collieries. We spoke to
a cross-section of people who hail from the three different regions of
Andhra Pradesh to get a perspective on the recent developments. From
an issue of water (neelu), funds (nidhulu) and jobs (niyamakalu), it has
now become an emotional issue, although opinion is divided on the need
for a separate state. Normal life has been hit as government employees
belonging to the Telangana region, and road transport workers are on
strike and have been joined by the auto workers.
Other than that there is marginal impact as of now on day to day life and
services business, although there is an apprehension of large scale
disturbance if the central government orders a crackdown on the
protestors and striking trade unions. Given the uncertainty, investments
into the state have been impacted as have normal government decisions,
regular revenue collections etc. Everyone that we spoke to is convinced
that the central government has mishandled the agitation and whatever
be the final decision, the Congress party is going to be the biggest loser
when the state next goes to elections. 33 of Congress’s 206 MPs come
from Andhra Pradesh and it was critical for brining Congress to power.
Erosion of popularity in this state is of big concern to the Congress. A
weak state government and dithering by the UPA are the oft cited
reasons for things coming to this stage and some announcement is
expected over the next few days.
Neelu, nidhulu, niyamakalu
“Strong economic growth, good monsoons, sustained consumer demand in
both rural and urban India and the first signs of revival in investment demand
– all augur well for the near term. The wall of liquidity has also helped the
market to scale new highs after the financial crisis. But poor governance may
yet come to haunt the markets, if something does not change over the next
couple of years.”
- India Politics: Whither governance?, 09th September 2010
“We must see what is in the larger interest of the people themselves…the
government must think in a very calm manner about the interest of the
people of that very region and see what will serve their interest best...I stand
firrmly for an integrated State…It does not matter how many states we have,
you still will be neighbours and you will still have to deal with one another in
a hundred and one things. ”
- Smt Indira Gandhi, Prime Minister (1972)
Background
The Telangana movement is over four decade old movement (since 1969) in
demand for a separate state of Telangana to be carved out of the state of
Andhra Pradesh (AP). Andhra Pradesh has three major regions – Telangana
(under the control of the Nizam of Hyderabad prior to independence),
Rayalseema and coastal Andhra (both ruled by the Britishers prior to
independence). Hyderabad, the economic nerve centre of the state, is
considered a fourth region. For historical reasons, the political leadership has
been dominated by the politicians of Rayalseema and coastal Andhra and this
has resulted in lopsided allocation of funds, job creation and investments in
the state. Many attempts and measures promised to correct this have never
been implemented in spirit. However, the overall statistics does not
necessarily bear this out in every respect. Telangana and Rayalseema are
almost at similar levels in most development indicators and coastal Andhra is
clearly better off.
To quote a MLA from Andhra Pradesh we spoke to: “You must look at the
bigger picture beyond Telangana. While we have the so called demographic
dividend, increasingly there are a large number of young people without skills
or productive employment. There is anger among the youth. This anger may
be channelized in different forms depending on the local circumstances. In AP
it is visible in the form of this movement. The second reason in this particular
instance is that major political parties are entirely to be blamed for
deliberately creating a situation unrelated to facts and evidence and
spreading the message that your problems are because of somebody else.
For electoral gains they mouth these things irrespective of evidence. Now this
has become a truism as far as the people are concerned...It has become a
polarizing issue but is there any evidence of special discrimination because of
which there is underdevelopment or poverty?”
Recent events and its impact
The indefinite “people’s strike” in the Telangana region competed a month on
12th October. The administration has remained paralysed as government
employees have continued their strike and routine work like vehicle
registrations have been delayed for weeks. This month people are yet to
receive their electricity bills. We spoke to a few people in Andhra Pradesh –
students, journalists, retired individuals, government officials, a politician,
retailers and private sector employees. The worst impacted by this are the
lower middle income group and low income group families who are dependent
on public transport and daily wages. Also impacted are students as schools
and colleges have remained shut for weeks.
Coal production in Singareni Collieries, which annually produces over 50mt
(c.10% of India’s annual production is around 550mt), has been severely
impacted and this has had a cascading impact on power generation across the
country. With almost the entire country reeling under severe power cuts,
there have been reports of power riots in some towns in Maharashtra.
September and October industrial production will likely see an adverse impact
of the power cuts. The power situation has also been impacted by floods in
Orissa, which has impacted production and off-take from Mahanadi Coalfields
and the strike by Coal India employees. Industrial production for the country
in September and October likely to be worse than in August given the
prevailing situation.
Shops, restaurants and malls are open barring for some disruptions for a few
days during the last one month. Organized retailers we spoke to said that
there has been no significant impact of the ongoing strikes and disturbances.
But people we spoke to in Hyderabad told us that footfalls have reduced and
this will likely impact sales in what is the busiest season of the year. Our
earlier report by Jaibir Sethi “Hyderabad blues” dated 27th September 2011
highlighted this issue.
Going forward and political fallout
People we spoke to had divided opinion on the need and rationale for the
separate state of Telangana depending on which part of the state they hailed
from. A journalist told us that what was a problem of neelu, nidhulu and
niyamakulu to begin with (an economic rationale to the agitation) has now
acquired an emotional and cultural dimension. And this is something that is
widely acknowledged. Most blame it on the politicians for fomenting the
agitation and keeping the issue alive, when there are no major gains. Sincere
attempts can be made to undo historical economic injustices by giving special
economic packages and also some autonomy as has been done with the
Gorkhaland Hill Council in West Bengal.
But there is near unanimity among the people we spoke to that the demand
for Telangana was revived thanks to miscalculations of the central
government. On December 09, 2009 pushed to the corner by the fast of K
Chandrasekhar Rao of TRS (Telangana Rashtra Samiti), union home minister
(P Chidambaram) announced the centre’s decision, supported by the
Congress high command, of approving the creation of a new state. Everyone
agrees that this gave a fillip to the movement, which was losing its
momentum. According to some, the centre’s statement in December 2009
convinced most people that Telangana is a “done deal” and therefore, there is
a schism between the people of Telangana and rest of Andhra Pradesh now.
With the centre dithering and not taking a decision either way, the blame is
being put squarely on the doorsteps of the Congress party. Hence, the party
is likely to be the biggest loser irrespective of the final decision. People we
spoke to want an early decision because daily life is getting impacted in some
way or the other and people are especially worried about the prolonged
disruption in the schedules of schools and colleges. From the corporate
sector’s perspective, new investments have been at a standstill as have been
investment decisions of the state government. The problems have been
compounded by a weak leadership of the Congress at the state level.
We were also told that if a separate state is not created and the current
movement is suppressed by the use of the state might then there is a chance
that Naxalism rears up its head again in the Telangana region, thus negating
the gains of the last ten years when the state brought the problem of
Naxalism under control.
We have received feedback that the centre is unlikely to agree to the creation
of another state since:
the Congress has most to lose from such a decision
this is likely to start a series of demand for separate state’s in different
parts of the country, including from Rayalseema region of Andhra Pradesh
What are the likely solutions now? Hyderabad, the economic growth engine of
the state, is the biggest bone of contention. Given the continued disruption in
government services and now severe power shortages, people are expecting
that the centre will likely do any of the following and may announce its
decision any day:
constitute a second State Reorganization Commission to look at all such
demands for a new state; this will also help to calm the situation now and
push back the decision to another day few years away
at the same time crack down on the movement’s leader to restore
normalcy in the state and if necessary, bring the state under President’s
rule
most believe that the best solution is to grant autonomy to the different
regions and take the decision quickly and fairly; let Hyderabad remain the
state capital. And come up with cogent set of reasoning to “sell” the
solution. Unfortunately a weak state leadership is unlikely to be able to
deliver on this and major political parties will have to look beyond the
electoral gains
another solution is to split the state and give Hyderabad the status of an
Union Territory
Opinion is divided whether a crack down will cause spiralling of violence,
which has not happened during this round of protests and strike. Delaying
tactics is to an extent paying off in the sense that people are now pushing for
the opening up of schools and colleges and some of the striking Road
Transport workers are back at work. The central government is likely banking
on the attrition in the rank of the protestors and thus, not taking any
decision.
On 12th April 2010, in one of our notes we had written, “What the Naxal
attack brings to the fore is the inadequate state preparedness to respond to a
crisis situation and also the deterioration in governance over decades…The
government more often than not seems to be responding in a knee jerk
manner. The uncoordinated response was witnessed during the 26th
November terror attack on Mumbai. It was witnessed once again during the
Telangana crisis in Andhra Pradesh. The Indian state seems to lack any
grievance redress mechanism or mechanism to tackle issues of importance
before they reach crisis proportions. The Maoist problem has been simmering
for years. As a result, the state often comes across as unsympathetic,
uncaring and lacking in any coherent strategy.” Unfortunately not much
seems to have changed. And this governance deficit has taken its toll on
investments and markets.
Importance of Andhra Pradesh
Investments
It is 2nd among the top 10 investment destination states in India with
industrial investments in the state crossing Rs123.5bn during the last
three and half years
Exports Among the top 3 states in software exports in the country
Infrastructure
Operationalisation of the first green field international airport of the
country at Hyderabad; The new 8-lane Outer Ring Road, more than 42
Special Economic Zones, massive irrigation projects and 10 new
seaports form part of rapid infrastructure development of the State;
rich mineral resources like coal, and limestone
Agri contribution
Andhra Pradesh is among the largest producers of food grains, fruits,
vegetables, cotton, maize, dairy and poultry products in the country. It
has been net exporter of many agro products
Growth
Over the past decade, it has emerged as one of India’s fastest growing
states with respect to parameters of GDP and per capita GDP; Andhra
Pradesh now has the sixth highest per capita GDP amongst all states
Source: www.cii.in; CLSA Asia-Pacific Markets
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Neelu, nidhulu, niyamakalu
Most Indian states are reeling under severe power cuts as the Telangana
strikes take its toll on the production of Singareni Collieries. We spoke to
a cross-section of people who hail from the three different regions of
Andhra Pradesh to get a perspective on the recent developments. From
an issue of water (neelu), funds (nidhulu) and jobs (niyamakalu), it has
now become an emotional issue, although opinion is divided on the need
for a separate state. Normal life has been hit as government employees
belonging to the Telangana region, and road transport workers are on
strike and have been joined by the auto workers.
Other than that there is marginal impact as of now on day to day life and
services business, although there is an apprehension of large scale
disturbance if the central government orders a crackdown on the
protestors and striking trade unions. Given the uncertainty, investments
into the state have been impacted as have normal government decisions,
regular revenue collections etc. Everyone that we spoke to is convinced
that the central government has mishandled the agitation and whatever
be the final decision, the Congress party is going to be the biggest loser
when the state next goes to elections. 33 of Congress’s 206 MPs come
from Andhra Pradesh and it was critical for brining Congress to power.
Erosion of popularity in this state is of big concern to the Congress. A
weak state government and dithering by the UPA are the oft cited
reasons for things coming to this stage and some announcement is
expected over the next few days.
Neelu, nidhulu, niyamakalu
“Strong economic growth, good monsoons, sustained consumer demand in
both rural and urban India and the first signs of revival in investment demand
– all augur well for the near term. The wall of liquidity has also helped the
market to scale new highs after the financial crisis. But poor governance may
yet come to haunt the markets, if something does not change over the next
couple of years.”
- India Politics: Whither governance?, 09th September 2010
“We must see what is in the larger interest of the people themselves…the
government must think in a very calm manner about the interest of the
people of that very region and see what will serve their interest best...I stand
firrmly for an integrated State…It does not matter how many states we have,
you still will be neighbours and you will still have to deal with one another in
a hundred and one things. ”
- Smt Indira Gandhi, Prime Minister (1972)
Background
The Telangana movement is over four decade old movement (since 1969) in
demand for a separate state of Telangana to be carved out of the state of
Andhra Pradesh (AP). Andhra Pradesh has three major regions – Telangana
(under the control of the Nizam of Hyderabad prior to independence),
Rayalseema and coastal Andhra (both ruled by the Britishers prior to
independence). Hyderabad, the economic nerve centre of the state, is
considered a fourth region. For historical reasons, the political leadership has
been dominated by the politicians of Rayalseema and coastal Andhra and this
has resulted in lopsided allocation of funds, job creation and investments in
the state. Many attempts and measures promised to correct this have never
been implemented in spirit. However, the overall statistics does not
necessarily bear this out in every respect. Telangana and Rayalseema are
almost at similar levels in most development indicators and coastal Andhra is
clearly better off.
To quote a MLA from Andhra Pradesh we spoke to: “You must look at the
bigger picture beyond Telangana. While we have the so called demographic
dividend, increasingly there are a large number of young people without skills
or productive employment. There is anger among the youth. This anger may
be channelized in different forms depending on the local circumstances. In AP
it is visible in the form of this movement. The second reason in this particular
instance is that major political parties are entirely to be blamed for
deliberately creating a situation unrelated to facts and evidence and
spreading the message that your problems are because of somebody else.
For electoral gains they mouth these things irrespective of evidence. Now this
has become a truism as far as the people are concerned...It has become a
polarizing issue but is there any evidence of special discrimination because of
which there is underdevelopment or poverty?”
Recent events and its impact
The indefinite “people’s strike” in the Telangana region competed a month on
12th October. The administration has remained paralysed as government
employees have continued their strike and routine work like vehicle
registrations have been delayed for weeks. This month people are yet to
receive their electricity bills. We spoke to a few people in Andhra Pradesh –
students, journalists, retired individuals, government officials, a politician,
retailers and private sector employees. The worst impacted by this are the
lower middle income group and low income group families who are dependent
on public transport and daily wages. Also impacted are students as schools
and colleges have remained shut for weeks.
Coal production in Singareni Collieries, which annually produces over 50mt
(c.10% of India’s annual production is around 550mt), has been severely
impacted and this has had a cascading impact on power generation across the
country. With almost the entire country reeling under severe power cuts,
there have been reports of power riots in some towns in Maharashtra.
September and October industrial production will likely see an adverse impact
of the power cuts. The power situation has also been impacted by floods in
Orissa, which has impacted production and off-take from Mahanadi Coalfields
and the strike by Coal India employees. Industrial production for the country
in September and October likely to be worse than in August given the
prevailing situation.
Shops, restaurants and malls are open barring for some disruptions for a few
days during the last one month. Organized retailers we spoke to said that
there has been no significant impact of the ongoing strikes and disturbances.
But people we spoke to in Hyderabad told us that footfalls have reduced and
this will likely impact sales in what is the busiest season of the year. Our
earlier report by Jaibir Sethi “Hyderabad blues” dated 27th September 2011
highlighted this issue.
Going forward and political fallout
People we spoke to had divided opinion on the need and rationale for the
separate state of Telangana depending on which part of the state they hailed
from. A journalist told us that what was a problem of neelu, nidhulu and
niyamakulu to begin with (an economic rationale to the agitation) has now
acquired an emotional and cultural dimension. And this is something that is
widely acknowledged. Most blame it on the politicians for fomenting the
agitation and keeping the issue alive, when there are no major gains. Sincere
attempts can be made to undo historical economic injustices by giving special
economic packages and also some autonomy as has been done with the
Gorkhaland Hill Council in West Bengal.
But there is near unanimity among the people we spoke to that the demand
for Telangana was revived thanks to miscalculations of the central
government. On December 09, 2009 pushed to the corner by the fast of K
Chandrasekhar Rao of TRS (Telangana Rashtra Samiti), union home minister
(P Chidambaram) announced the centre’s decision, supported by the
Congress high command, of approving the creation of a new state. Everyone
agrees that this gave a fillip to the movement, which was losing its
momentum. According to some, the centre’s statement in December 2009
convinced most people that Telangana is a “done deal” and therefore, there is
a schism between the people of Telangana and rest of Andhra Pradesh now.
With the centre dithering and not taking a decision either way, the blame is
being put squarely on the doorsteps of the Congress party. Hence, the party
is likely to be the biggest loser irrespective of the final decision. People we
spoke to want an early decision because daily life is getting impacted in some
way or the other and people are especially worried about the prolonged
disruption in the schedules of schools and colleges. From the corporate
sector’s perspective, new investments have been at a standstill as have been
investment decisions of the state government. The problems have been
compounded by a weak leadership of the Congress at the state level.
We were also told that if a separate state is not created and the current
movement is suppressed by the use of the state might then there is a chance
that Naxalism rears up its head again in the Telangana region, thus negating
the gains of the last ten years when the state brought the problem of
Naxalism under control.
We have received feedback that the centre is unlikely to agree to the creation
of another state since:
the Congress has most to lose from such a decision
this is likely to start a series of demand for separate state’s in different
parts of the country, including from Rayalseema region of Andhra Pradesh
What are the likely solutions now? Hyderabad, the economic growth engine of
the state, is the biggest bone of contention. Given the continued disruption in
government services and now severe power shortages, people are expecting
that the centre will likely do any of the following and may announce its
decision any day:
constitute a second State Reorganization Commission to look at all such
demands for a new state; this will also help to calm the situation now and
push back the decision to another day few years away
at the same time crack down on the movement’s leader to restore
normalcy in the state and if necessary, bring the state under President’s
rule
most believe that the best solution is to grant autonomy to the different
regions and take the decision quickly and fairly; let Hyderabad remain the
state capital. And come up with cogent set of reasoning to “sell” the
solution. Unfortunately a weak state leadership is unlikely to be able to
deliver on this and major political parties will have to look beyond the
electoral gains
another solution is to split the state and give Hyderabad the status of an
Union Territory
Opinion is divided whether a crack down will cause spiralling of violence,
which has not happened during this round of protests and strike. Delaying
tactics is to an extent paying off in the sense that people are now pushing for
the opening up of schools and colleges and some of the striking Road
Transport workers are back at work. The central government is likely banking
on the attrition in the rank of the protestors and thus, not taking any
decision.
On 12th April 2010, in one of our notes we had written, “What the Naxal
attack brings to the fore is the inadequate state preparedness to respond to a
crisis situation and also the deterioration in governance over decades…The
government more often than not seems to be responding in a knee jerk
manner. The uncoordinated response was witnessed during the 26th
November terror attack on Mumbai. It was witnessed once again during the
Telangana crisis in Andhra Pradesh. The Indian state seems to lack any
grievance redress mechanism or mechanism to tackle issues of importance
before they reach crisis proportions. The Maoist problem has been simmering
for years. As a result, the state often comes across as unsympathetic,
uncaring and lacking in any coherent strategy.” Unfortunately not much
seems to have changed. And this governance deficit has taken its toll on
investments and markets.
Importance of Andhra Pradesh
Investments
It is 2nd among the top 10 investment destination states in India with
industrial investments in the state crossing Rs123.5bn during the last
three and half years
Exports Among the top 3 states in software exports in the country
Infrastructure
Operationalisation of the first green field international airport of the
country at Hyderabad; The new 8-lane Outer Ring Road, more than 42
Special Economic Zones, massive irrigation projects and 10 new
seaports form part of rapid infrastructure development of the State;
rich mineral resources like coal, and limestone
Agri contribution
Andhra Pradesh is among the largest producers of food grains, fruits,
vegetables, cotton, maize, dairy and poultry products in the country. It
has been net exporter of many agro products
Growth
Over the past decade, it has emerged as one of India’s fastest growing
states with respect to parameters of GDP and per capita GDP; Andhra
Pradesh now has the sixth highest per capita GDP amongst all states
Source: www.cii.in; CLSA Asia-Pacific Markets
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